PayPal, the global leader payment gateway, which was acquired by eBay in October 3, 2002 has been helping small to large merchants, freelancers and small business owners throughout the world. Everyone knows how easy and convenient it is, to use PayPal as a payment gateway. Developers in my company always speak aloud about this gateway which is feature rich and is easiest to integrate on any website and comes with many up-front utilities and above that it costs nothing to have one and it charges a fee only when you receive a payment. Except a few countries where PayPal do not offer its service, it’s a life saver, specifically for small business owners and freelancers doing business globally.

PayPal was running smooth in India for Indian merchants until RBI imposed restrictions and norms on its activity after which PAN number and purpose code became compulsory and merchants faced a lot of hassle during the transition. It also stopped allowing withdrawal of funds to a USA Bank account which used to be allowed earlier. Despite these things, it started running smoothly but merchants kept on looking for alternatives to PayPal and the primary reason for this was PayPal’s woefully low conversion rate. PayPal in India would always convert your bank withdrawal to Indian Currency and would give its own conversion rate which on an average is always a rupee less than the average bank rate of conversion. If we consider that a merchant brings in $10000 a month considering market rate to be Rs55/- per US$ then he would loose Rs10000/- as a minimum per month due to poor conversion rate. PayPal always remained blind to this issue and continued using its partner bank named Citi Bank for the withdrawal process.

I have therefore always being avoiding PayPal and have been sending money directly from my USA business to India business via bank wire. But TODAY was a big day when I tried using the Indian Paypal account and was surprised or rather shocked to see the conversion rate while sending the money withdrawal request. The rate was Rs53.898 per US Dollar which was higher than the value offered by SBI, the rates of SBI are given below:

If you notice, the rate offered by SBI is much lower and is coming to PayPal level only if you send a minimum of $7000 but again this rate is applicable only when you are sending from USA as a personal payment. For business wire remittance, you always get the lowest listed rate from SBI. Earlier, PayPal rate used to be a minimum of a rupee and sometimes up to two less. Now this is a BIG STEP by PayPal. I have no clue whether the credit goes to PayPal or to its partner CitiBank India, but ultimately the merchants are going to be benefited with this.

I hope if the trend continues and PayPal continues to offer great rates then I am sure this will attract more and more PayPal users. This in turn, will attract more Indian merchants who deal globally as well as locally. It may still take some time for PayPal to offer INR as a selling currency to its Indian merchants, but nevertheless, this great move of offering better Forex conversation rate will be warmly welcomed by Indian Merchants and will result in increased number of merchants using PayPal as their preferred payment gateway.